This is a sample business plan for the setup of a medium scale supermarket in Nigeria. A supermarket is a large retail mart that stocks a wide range of consumables although in Nigeria people often times mix up the term with grocery store or convenience shop. Simply put, a supermarket is a self-service shop wherein people can move about with a shopping basket to order for whatever product they wish to buy and pay for them at a counter where a cashier receives the items, scans them then presents the customer with a receipt for payments.
In Nigeria, there are
very few standard supermarkets – the ones that have well stocked and organised product
segments that can guarantee customers a one stop shopping experience. Notable
supermarket brands in Nigeria include; Ebeano Supermarket, Next, Grand Square,
Shoprite, W2 Supermarket, Park ‘N’ Shop, 411 Supermarket, Sahad Stores to name
a few.
The Business Opportunity for Supermarkets in
Nigeria
Nigeria is largely a
consumer economy with large middle class population - roughly between 23 and 38
million people – with strong western influences and is inclined to purchase
lifestyle products and consumables. Most of its middle class are young families
with reasonably educated parents and who fall within an income bracket that can
purchase range of products such as; detergents, groceries, skincare products,
healthcare products, processed foods, toiletries, electronics, stationery to
name a few. The average middle class family spends at least 60,000 naira monthly
on consumables for a family of 6 and this market segment accounts for at least
2.3 trillion naira per annum in retail sales. That means this market segment is
still underserved in as much as it should even with over 2 billion dollars invested
in this industry since 2010.
Supermarkets should not be confused with Convenience shops even
though they sell similar products as supermarkets- they aren’t always
self-service and very often don’t offer one stop shopping option to customers. You
would typically also find them in neighbourhoods and residential areas.
Challenges of Owning and Running A Supermarket in Nigeria
The major challenges
come from declining purchasing power of potential customers since 2015 and
rising cost of doing business in the country. Many Nigerian businesses operate
within a hostile business environment with power cuts very common. Price of
fueling and maintaining generating sets is astronomical. Then there are
occasional threats from armed robbers and looters as was the case with #endsars
protests and reprisal attacks against South African xenophobic attacks – but this
are rare. There is also the challenge of theft from staff. Also finding a very
good location for this business is a big challenge as it usually isn’t easy tom
come by and even when it is often comes at a high price.
Where are good places to site a Supermarket Business?
Ideal locations are
busy and conspicuous places with good parking space in middle class locations
in any of the major consumer market cities in Nigeria. For instance big cities
like Ibadan, Lagos, Kano, Kaduna, Port Harcourt, Benin, Abuja and Warri. Owning
the building is a long term advantage however renting our spacious shopping
space is still a viable alternative.
Start-up Requirements
The following
breakdown is a sample estimate and it is conservative.
- Stock – N 20,000,000
- Cash at hand – N 15,000,000
- Furniture Expenses – N 1,500,000
- Generator set – N 5,000,000
- 2 years Rent – N 18,600,000
- Others – N 12,000,000
- Total – N 72,100,000
First Year Sales Projection
Assuming the
supermarket is able to achieve daily sales of 6 million and is open everyday of
the week with assumed gross profit margin on sales of 14.3%, a first year sales
projection could look like this;
|
Item |
Estimate |
|
Gross Sales Gross Profit Operating Expenses Profit before tax Taxation Profit after tax ROI Payback Period |
180,000,000 25,800,000 12,600,000 13,200,000 3,960,000 9,240,000 12.5% 7 to 8 years |
Other Related Sample Business Plan
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Paul Onwueme is a
professional Business Plan writer since February 2014, has achieved respectable
results with his business plan writing service with several of his clients
securing funding and leaving positive feedback about his writing service. You
can connect with him via phone: 0803 206 4106 or email: paulonwueme@gmail.com
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